Australia central bank subsidiary in Saddam link

Sydney (AFP) – A company owned by the Reserve Bank of Australia (RBA) was Monday accused of attempting to strike an illegal business deal with former Iraqi dictator Saddam Hussein at the height of UN sanctions.

Secret files show that officials from the central bank's scandal-hit Note Printing Australia (NPA) went to Iraq to discuss a contract to turn the country's paper currency into polymer notes, according to a joint investigation by the Australian Broadcasting Corporation and Fairfax Media.

"Indications from Arshad Yassin's office are that Saddam Hussein's office has already allocated $US65 million for the total project," RBA officials said in one document reported by the media groups.

"He has confirmed that Saddam Hussein has seen the polymer notes samples and is keen to adopt our product."

Reserve officials working for NPA said the funds could potentially be accessed by funnelling them through a Jordanian bank "with the green light of SH (Saddam Hussein)," the reports said.

The operation was called off six months later after Australian diplomats uncovered the secret dealings with the brutal regime, according to the ABC.

David Chaikin, a legal expert at the University of Sydney who reviewed the confidential bank documents, said the negotiations were a violation of international law and alarm bells should have been sounded "to the highest levels of the bank".

"What was happening is not only in violation of law, but could potentially destroy and undermine the reputation of Note Printing Australia and its owner, the Reserve Bank," he told the broadcaster.

He added to Fairfax that the files contained a "very strong prima facie" case that officials involved in the trip had breached a UN sanction that banned Australians from promoting the sale or supply of goods to Iraq.

The central bank on Monday said it had no immediate comment.

NPA has been plagued by allegations of corruption in recent years, with claims it and another RBA subsidiary Securency paid bribes to win plastic bank note contracts in Asia.

Executives from both companies have been charged over the alleged racket, which involved contracts in Indonesia, Malaysia, Vietnam and Nepal, following an expose by Fairfax in 2009.

The RBA has previously denied it attempted to hide information related to the Asian contracts, with bank chief Glenn Stevens telling an inquiry last year that he knew nothing about the scandal before it was exposed.